Dimension seeks to establish 31 national banks and has filed
applications to that effect with the Comptroller of the
Currency under procedures set forth in 12 U.S.C. § 21 et seq.
Under such procedures, persons seeking to organize a national
bank must, inter alia, apply for and obtain from the
Comptroller a certificate of authority, or charter, before
banking may be commenced. 12 U.S.C. § 26, 27. Before approval
is given, a hearing is normally held to determine the
appropriateness of the application. Ordinarily, once the
Comptroller determines that the organization of the proposed
bank is appropriate, preliminary approval will be granted.
Only once numerous conditions are fulfilled will a certificate
of authority under 12 U.S.C. § 27 thereafter be issued.
Under 12 U.S.C. § 21, a national bank may only be formed by
five or more "natural persons" and, consequently, may not be
formed by a holding company. Additionally, under the BHCA, a
bank holding company may not obtain ownership or control of a
bank unless approval of the Federal Reserve Board (the Board)
has first been obtained.
In the instant action, the Comptroller has scheduled public
hearings on the applications for the week of August 8, 1983.
The plaintiffs, Deerbrook State Bank and various Independent
Banking Associations contend that before the Comptroller may
take any steps towards granting charters to the proposed banks
including the holding of hearings, either a declaration from
the Board that the BHCA does not apply to the Dimension
proposal or permission from the Board to obtain the proposed
banks must first be obtained. According to the plaintiffs, it
is Dimension's position that the BHCA does not apply to the
instant applications because the proposed banks will not engage
in commercial lending. The BHCA only applies to institutions
which, inter alia, "[engage] in the business of making
commercial loans." 12 U.S.C. § 1841(c). The plaintiffs seek a
preliminary injunction to prevent the Comptroller from holding
the scheduled hearings or taking any other steps toward
chartering the proposed institutions.
The issue presently before the Court is not whether a decision
by the Board is required before the Comptroller may issue a
charter to the proposed institution, but whether such a
decision must be made before the Comptroller takes any steps
whatsoever toward certification. Clearly, the issue of whether
there has been a violation of the BHCA rests within the
exclusive jurisdiction of the Board. Whitney National Bank v.
Bank of New Orleans and Trust Co., 379 U.S. 411, 85 S.Ct. 551,
13 L.Ed.2d 386 (1965). When the Board receives an application
under the BHCA, as plaintiffs have filed in the instant case,
it is required to give notice to the Comptroller. 12 U.S.C. § 1842(b).
Where Board approval is required, the Comptroller is
bound to condition the granting of the charter on subsequent
Board approval. Gravois Bank v. Board of Governors of the
Federal Reserve System, 478 F.2d 546 (8th Cir. 1973). If the
Comptroller does issue a charter before a substantial BHCA
question has been decided, an injunction clearly may issue
until the Board has reached its decision. American Bank of
Tulsa v. Smith, 503 F.2d 784 (10th Cir. 1974).
In the instant case, no charter has been issued by the
Comptroller, nor is there any threat that any charter will
issue in the near future or before several procedural steps are
taken. Indeed, at this juncture, there is no indication that
even a preliminary charter will be granted. The only
occurrence which will happen, should no preliminary injunction
issue, is the holding of a long-scheduled, week-long hearing
which, incidentally, was requested by the plaintiffs.*fn2
In order to grant a preliminary injunction, the Court must
determine that plaintiffs have shown that:
(1) they have at least a reasonable likelihood of success on
(2) they will be irreparably harmed and have no adequate remedy
(3) the threatened injury to them outweighs the threatened harm
the preliminary injunction may cause the defendants; and,
(4) the granting of the preliminary injunction will not
disserve the public interest.
Syntex Ophthalmics, Inc. v. Tsuetaki, 701 F.2d 677, 681 (7th
Cir. 1983); O'Conner v. Board of Education, 645 F.2d 578, 580
(7th Cir.). According to the Seventh Circuit Court of Appeals,
"A preliminary injunction is an extraordinary remedy, available
only to plaintiffs who carry the burden of persuasion as to all
four factors." Signode Corp. v. Weld-Loc Systems, Inc.,
700 F.2d 1108, 1111 (7th Cir. 1983). Within the constraints of such
factors, decisions to grant or deny injunctive relief rest
within the sound discretion of the district court.
Wesley-Jessen Division of Schering Corporating v. Bausch &
Lomb Incorporated, 698 F.2d 862, 864 (7th Cir. 1983).
The plaintiffs have failed to show that they have even a
reasonable likelihood of success on the merits of the instant
lawsuit. Were the issue before this Court whether the
Comptroller may issue a charter to the proposed institutions
before the Board has decided issues exclusively within its
jurisdiction, a different result would clearly be warranted.
See, e.g., Whitney, supra, Marshall & Isley Corp. v. Heimann,
652 F.2d 685 (7th Cir. 1981); American Bank of Tulsa, supra.
However, the issue before this Court, plainly stated, is
whether the Comptroller can be enjoined from taking any steps
whatsoever, including deciding issues which are particularly
within his jurisdiction, while substantial BHCA issues remain
outstanding. This Court does not believe that, at this juncture
in the Comptroller's proceedings, the plaintiffs have shown
there is a reasonable likelihood of their ultimate success on
Contrary to the plaintiffs' arguments, denial of the requested
preliminary injunction, or of any injunction, is not tantamount
to placing the Court's imprimatur on the Comptroller's
overstepping of the bounds of his authority. Indeed, the
Supreme Court has noted that the Comptroller's function in
these proceedings is in "addition to" and therefore not
inconsistent with that of the Board. Whitney National Bank v.
Bank of New Orleans and Trust Co., 379 U.S. 411, 419-420, 85
S.Ct. 551, 557, 13 L.Ed.2d 386 (1965). Furthermore, while the
Comptroller could be precluded from issuing a final charter
until it was determined whether there was a violation of some
other law, 379 U.S. at 426 fn. 7, 85 S.Ct. at 560, fn. 7, it
has been recognized that even if the Comptroller did act, it
would not affect the power of the Board to take such action as
was indicated. American Bank of Tulsa v. Smith, 503 F.2d 784,
788 (10th Cir. 1974). Clearly the Comptroller has a substantial
role in the certification of the proposed institutions. At this
point in the certification proceedings, the plaintiffs have
failed to show that the comptroller has or will exceed that
role such that the issuance of an injunction would be
Because of the preliminary stage of the Comptroller's
proceedings, the plaintiffs have not only failed to demonstrate
a reasonable likelihood of success on the merits, but have also
failed to demonstrate that they will be irreparably harmed if
no preliminary injunction is issued.
The injuries which the plaintiffs claim will occur involve the
harm which they will suffer as a result of increased
competition should the proposed institutions be approved as
well as the cost and burden of maintaining parallel
litigation.*fn3 As to the latter "injury," while the Court
can appreciate the plaintiffs' concern with avoiding
duplicative litigation, participation in such litigation does
not rise to the level of irreparable
harm. Federal Trade Commission v. Standard Oil Co. of
California, 449 U.S. 232, 244, 101 S.Ct. 488, 495, 66 L.Ed.2d
As to the claim that the plaintiffs will be harmed by
anticipated increased competition, at this juncture, such harm
is far too speculative to warrant the granting of a preliminary
injunction. As the Court has already noted, numerous procedures
must be followed and various conditions must be met before a
certificate to do business could possibly be issued. In the
interim, the Board should have sufficient opportunity to rule
on the issues before it. If it rules against Dimension, the
Comptroller would not be permitted to issue a charter.
Furthermore, even if the Board rules in favor of Dimension, the
very real possibility exists that the Comptroller's ruling will
be adverse to Dimension. Clearly, any anticipated harm is
purely speculative. Unlike the situation presented in American
Bank of Tulsa, there is no immediate threat to the plaintiffs
or to the Board's jurisdiction or the overall Congressional
scheme which would warrant the issuance of the requested
preliminary injunction. Where the possibility of harm is
distant and speculative, preliminary injunctive relief should
be denied. See, e.g., American Hospital Association v.
Harris, 625 F.2d 1328, 1332 n. 3 (7th Cir. 1980); American
Medicorp, Inc. v. Continental Illinois National Bank and Trust
Co., 475 F. Supp. 5, 7 (N.D.Ill. 1977).
Because the plaintiffs have failed to show that they have a
reasonable likelihood of succeeding on the merits of obtaining
a permanent injunction enjoining the Comptroller from taking
any preliminary steps, including the holding of a hearing,
toward granting Dimension the requested charters, and because
they have failed to show that they will be irreparably harmed
should no preliminary injunction issue, the plaintiffs' Motion
for a Preliminary Injunction is denied.
IT IS SO ORDERED.